The Federal Reserve Bank of New York works to promote sound and well-functioning financial systems and markets through its provision of industry and payment services, advancement of infrastructure reform in key markets and training and educational support to international institutions.

The Outreach and Education function engages, empowers and educates the Second District communities that the Bank serves, especially civic leaders, students, educators, small business owners, policymakers and the general public. It furthers the Bank's commitment to the region by listening to the communities we serve and leveraging our unique attributes to positively impact school and university programs, as well as analysis and research.

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

The Board of Governors of the Federal Reserve System has announced the adoption of 1998 fee schedules and the Private Sector Adjustment Factor (PSAF) for services provided by the Federal Reserve Banks, effective January 2, 1998. The following is from the Board's announcement:

The Federal Reserve Board has announced a reduction for next year in fees for electronic payment services provided by the Federal Reserve Banks. Fees for paper-based payment services will remain relatively flat. The fees become effective January 2, 1998.

Overall prices for Reserve Bank priced services are projected to decline by approximately 4.0 percent in 1998, compared to an overall price decline of 3.7 percent in 1997. The 1998 price decline is mainly attributable to an 11.4 percent reduction across electronic payment services, reflecting lower prices for most Fedwire funds transfers and automated clearing house (ACH) transactions.

Depository institutions will save an estimated $15.6 million in 1998 because of these fee reductions. The savings generally reflect the efficiencies gained from the success of a five-year project to consolidate the Federal Reserve's automation processing facilities. This project has resulted in an estimated savings for depository institutions of $41.8 million since 1995 from lower fees for electronic payment services.

In the Fedwire funds transfer service, the basic funds transfer fee will decline by 11.1 percent, from 45 cents to 40 cents. In the ACH service, fees will decline by as much as 12.5 percent for 1998, including a one mill ($0.001) decrease in fees for items originated, items received, and addenda items.

Fees for the paper check service will remain relatively flat, with a modest volume-weighted increase of 0.2 percent in 1998. Fees for the noncash, Fedwire boo-entry securities transfer, and net settlement services will be retained at their 1997 levels.

The 1998 priced services fee schedules are available from the Reserve Banks.

The Monetary Control At of 1980 requires the Federal Reserve to recover the costs of providing priced services over the long run. The Federal Reserve continues to fully meet this requirement, recovering 99.9 percent of the costs of priced services, including targeted return on equity, during the period 1987 through 1996.

In 1998, the Reserve Banks project to recover 100.8 percent of their priced services costs, including targeted return on equity, generating after-tax net income of $59.0 million. The Reserve Banks estimate that they will recover 101.0 percent of their costs in 1997.

The Board has also approved the 1998 private sector adjustment factor for Reserve Bank priced services of $108.5 million, an increase of $7.0 million or 6.9 percent from the 1997 targeted PSAF of $101.5 million. The PSAF is an allowance for taxes and other imputed expenses that would have been paid and return on capital that would have been earned had the Federal Reserve's priced services been provided by a private business firm.

The Board's official notice in this matter, as published in the Federal Register of November 10 is available as a file (pdf - 170kb). Questions regarding our priced services may be directed to your Account Manager (Tel. No. 212-720-6600 at the Head Office; Tel. No. 716-849-5065 at the Buffalo Branch).